Europe’s Gamble

Maurice Obstfeld

Maurice Obstfeld Professor of Economics - University of California, Berkeley

Discussants: Alberto Alesina and

Alberto Alesina Nathaniel Ropes Professor of Political Economy - Harvard University

Richard N. Cooper

RNC

Richard N. Cooper

AFTER THREE DECADES, the quest for European monetary unification
may well bear fruit on January 1, 1999. On that date the European
Union (EU) plans to introduce a common currency, the euro, in member
states that satisfy specified macroeconomic convergence criteria. If the
Economic and Monetary Union (EMU) project is launched on time and
with the maximum membership of eleven countries that currently seems
possible, it will create a market of close to 300 million consumers
served by a common currency-roughly 10 percent more populous than
the United States. Eventually that market could comprise twenty-five
countries or more if EMU is successful and the EU expands eastward.